Regulations Czar Prefers New Path

By DOUGLAS JEHL

Published: March 25, 2001

BOSTON, March 22 — For more than a decade, a Harvard professor named John D. Graham has raised money, eyebrows and hackles by arguing that in many cases the cost of environmental rules vastly exceeds the benefits.

Dr. Graham, the founder and director of a Harvard center that receives most of its money from industry, has become a pivotal figure in the battles over environmental regulation by arguing a theme that is pleasing to his donors' ears. He asserts that Americans would be far better off if, for example, the money devoted to pesticide control were spent on very different priorities, like hospital emergency rooms, even if in considerably smaller sums.

And now Dr. Graham is preparing to bring that view to the new administration. He is President Bush's nominee for a job that would make him a regulations czar, the head of an office in the Office of Management and Budget that must pass judgment on every regulation drawn up by some 50 government agencies. The job would give Dr. Graham enormous clout.

His nomination as administrator of the Office of Information and Regulatory Affairs has thrilled industry lobbyists and others who see it as a sign that the new administration intends to give more weight to strict cost-benefit tests.

But the nomination has troubled many environmentalists and some scholars, who say his ostensibly neutral research is far from objective. They say Dr. Graham would be a worrying addition to an administration they contend has already shown a penchant for disguising political decisions in a veil of objectivity.

"The whole strategy is not to criticize regulation per se," said Joan Claybrook, president of Public Citizen, an advocacy group, "but to stop it through paralysis-with-analysis."

Dr. Graham has not spoken publicly since he was nominated this month. Nominees often leave questions for confirmation hearings before the Senate's Government Operations Committee. Hearings have not been scheduled. No member of the committee has publicly voiced opposition to Dr. Graham.

As an academic, Dr. Graham, 44, has advocated a number of health and safety regulations, like seat belt requirements, on the ground that benefits clearly exceed costs. But he has been more skeptical about most environmental rules, arguing in one 1995 study that in terms of cost- effectiveness, certain Environmental Protection Agency regulations lag behind other agencies by a factor of hundreds, at a median cost of some $7.6 million per year of life saved. A more widely used calculation would try to determine the cost for each life saved, but Dr. Graham argues that what is most important is the total years of life saved.

In a 1996 speech, Dr. Graham told an audience at the Heritage Foundation that "environmental regulation should be depicted as an incredible intervention in the operation of society." His defenders, like William L. Kovacs, vice president for environment, technology and regulatory affairs at the United States Chamber of Commerce, say he is a realist whose work has helped provide a more solid foundation for industry complaints about excessive federal regulation.

"This is a guy who says, `Look folks, when you go home you have a one-in-60 chance of dying in an auto accident,' and no one does very much about it," Mr. Kovacs said. But, he added, with "some theoretical cancer risk of one-in-a-million or one in five million, you have people proposing a new regulatory structure."

In practice, Dr. Graham's ability to recast regulatory priorities would be somewhat restricted. A ruling by the Supreme Court this year upheld a prohibition in the Clean Air Act and other environmental legislation that expressly forbids federal agencies from considering costs as a factor in their decision making, directing that the agencies seek to do everything feasible to protect human health.

But even so, he would have enormous influence, so much so that some industry lobbyists regard the Office of Information and Regulatory Affairs as one of the most important agencies in the government, overseeing regulations whose cost to the economy has been measured by economists at $700 billion a year.

While the office cannot veto any regulations the various agencies propose, it must review all of them, under executive orders. And in disputes with agency chiefs, the administrator is rarely overruled by the president.

Under the administrator Wendy Gramm in the mid-1980's, the office was known within government as a "black hole" that swallowed up proposed health, safety and environmental regulations, and some of Dr. Graham's critics say they fear that, under his leadership, it would deserve the same moniker.

The 1995 study that Dr. Graham wrote with graduate students compared the cost-effectiveness of more than 500 life-saving interventions, like seat belts and radionuclide emission controls at uranium fuel plants, on the basis of available data. The study found that cost-efficiencies ranged from those like seat belts, whose cost Dr. Graham estimated was essentially nothing per year of life saved, to those like the emissions controls, whose cost he estimated at $34 billion per year of life saved.

To ignore the "life-saving opportunities" of such cost-benefit analysis, he said in testimony before Congress in 1995, would represent "a shocking display of statistical murder."